I have been working with Qing Ye and Clive Walker on a paper which looks at the effect of the media on financial markets in nineteenth-century London. The main finding of our paper is that there is a media discount which appears after the emergence of arm's-length ownership and increased market participation. This suggests that diffuse ownership may be a prerequisite for the media effect. Our findings help explain why the media appears to have little effect on present-day developing country financial markets. The working paper is available at the QUCEH website.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.
